The Solicitors Regulation Authority (SRA) has delayed the introduction of the second phase of its reforms of the rules on submitting accountants’ reports from next month to November this year.
The regulator said professional bodies and firms had expressed concerns about “potential wasted costs” where interim reports under the old system had already been commissioned.
The SRA said that there was an “almost universal welcome” of its direction of travel in seeking to reduce the burdens on firms in terms of accountants’ reports, following a consultation on the issue launched in November.
However, the regulator went on: “Many respondents stressed the need to reform the Accounts Rules themselves prior to agreeing any new framework for reporting.
“Given the SRA’s stated intention to reform the Accounts Rules in 2016, there were worries that these measures would lead to extra costs for accountants and firms coming to terms with a new system which would shortly be subject to more radical change.
“Concerns were also expressed at the intention to implement the new rules for firms with accounting periods ending in April 2015. Larger firms, it was said, would have already conducted interim work with reporting accountants under the old regime.
“More generally, there would be insufficient time for accountants to get to grips with the new process and this could lead to reporting delays and again increased costs.”
As a result, the SRA board this week agreed to go ahead with the proposed approach to the reforms in principle, including a change in report format to put more emphasis on the professional judgment of accountants, while officials finalised the “detailed drafting points and providing guidance on key issues”.
The board also agreed that “further modelling and assessment” was needed before a decision could be taken to exempt further categories of firms, for example those with annual turnovers of less than £10,000, from the requirements.
The board agreed that firms should not be required to make an annual declaration on their PC returns when accountants’ reports were submitted, as existing rules were adequate.